Birla Joins Reliance in Content Search

The Aditya Birla Group will buy a 27.5% stake in Living Media India, which controls the India Today news magazine and TV Today Network.

Indian conglomerate Aditya Birla Group’s announcement of an entry into the nation’s fast-growing media industry mirrors a similar move by Mukesh Ambani’s Reliance Industries Ltd. conglomerate in January.

Both deals show how Aditya Birla and Reliance are keen to get access to media content to support their telecoms businesses. As revenues from traditional voice calls plateau, both companies are looking to develop businesses delivering content over high-speed mobile internet.

Industrialist Kumar Mangalam Birla and his family-controlled companies that make up the Aditya Birla Group said Friday they will buy a 27.5% stake in Living Media India Ltd., which controls the India Today news magazine and TV Today Network Ltd., a Hindi and English television news provider, and also has tie-ups that bring out Indian editions of foreign publications like the Daily Mail, Men’s Health and Cosmopolitan. The terms of the deal were not disclosed.

The Aditya Birla Group owns a 45.96% stake in Idea Cellular Ltd.–India’s fourth biggest mobile telephone company by subscribers. The group also has interests in financial services and insurance, manufacturing and apparel.

“Globally, there are companies that are moving forward from just being a carrier to being a provider of all sorts of content,” said Romal Shetty, KPMG’s head of telecom in India. TV Today Network runs the popular Hindi news channel Aaj Tak and the English-language Headlines Today.

“The media sector is a sunrise sector from an investment point of view,” Mr. Birla said Friday.

Reliance Industries, via a complex deal with Network18 Group, has obtained preferential access to the media company’s content from all media, Web properties and digital content for its Infotel Broadband Services Ltd. unit. Network18 owns a series of top-rated news channels, including partnerships that run India’s versions of CNBC, CNN and MTV.

Infotel is setting up a pan-India, fourth-generation broadband-wireless network that it expects to roll out by year-end. Infotel plans to push digital content across devices and the deal will give it access to ready-made content across a range of languages and genres, including entertainment, news, sports, music, weather and education.

“For 4G to grow, it’s content more than the technology that’ll be the key driver,” Mr. Shetty observed.

But Mr. Shetty said telecom companies will need to provide a wider array of content to hook customers than just news and entertainment. Services that allow people to carry out business, trade stocks, access medical advice and take educational courses will be important to drive revenues, he added.

The telecom industry’s attempts to provide value-added services such as video and audio offerings are a major driver of such tie-ups, said an analyst with a local brokerage. The analyst said it’s a “win-win” situation as media companies get access to digital distribution over mobile bandwidth. In the Network 18 deal the media company also got a much-needed injection of funds from Reliance.

Some of India’s media companies have had a hard time turning large profits because of hefty fees they must pay cable operators.

Another analyst with a local brokerage said that the latest deal also is likely the result of Living Media’s attempts to raise funds to expand its print news business, including plans for a Mumbai edition of Mail Today, the company’s tie-up with the U.K.’s Daily Mail, and possibly a newspaper in Hindi.

Whatever the rationale for the deal, TV Today investors were not complaining. The stock jumped in Monday’s trade by a maximum 20% allowed under exchange rules to hit 64.80 rupees, outperforming the benchmark index’s 0.7% rise in afternoon trade. (The deal was announced after trading hours Friday.)

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